The National Supervision Council of the Financial System (Conassif) has authorized Banco Popular (BP) a significant discount of 40.7% on ¢18 billion in loans associated with Coopeservidores as part of a strategy to absorb the cooperative's 'good bank'.

According to an agreement published in the official gazette _La Gaceta_ on March 14, Banco Popular submitted a revised proposal on February 6, suggesting that instead of returning the troubled loan portfolio to Coopeservidores, it would retain it at a discount of 49.2%.

Banco Popular proposed to cover the difference of ¢9 billion by executing part of a guarantee provided by the cooperative, thereby mitigating any adverse impact on the recovery rates for investors.

In a statement released on March 27, Conassif reported that by March 2025, Banco Popular confirmed that the distressed loan portfolio, which should have returned to resolution, amounted to ¢18.024 billion.

The institution submitted a proposal to retain the portfolio in exchange for an additional discount of ¢8.862 billion, translating to a total discount of 49.2%, to be offset by the guarantee.

Conassif indicated that this option allows Banco Popular to avoid returning any problematic loans while adhering to acceptable risk levels, ensuring partial recovery of the provided guarantee.

The council noted that under the original plan, Banco Popular would have had to return the portfolio and execute the guarantee for the full ¢18 billion.

As a result of this decision, creditors are set to recover ¢9.138 billion from the provided guarantee, which Conassif described as the 'most beneficial option' for creditors ahead of the initiation of bankruptcy proceedings, both in terms of cash recovery percentages and timing.

In recent developments, several financial entities have shown interest in acquiring loan portfolios with similar issues, offering discounts that range from 3.9% to 25% of the total value.

In contrast, the negotiation with Banco Popular has yielded a 40.7% recovery rate.

Antonio Barzuna, a spokesperson for a group of Coopeservidores investors, praised Conassif's resolution, stating that the retention of an additional ¢18 billion in the analyzed portfolio is advantageous for ongoing recovery efforts of their investments.

Barzuna emphasized that every recovery achieved at this stage is favorable for investors, as it helps to prevent reaching a concursal stage.

The ¢18 billion in loans constitutes approximately 6% of the credits that Banco Popular absorbed from Coopeservidores’ 'good bank' operation, which included both assets and liabilities of the cooperative.

The resolution process for Coopeservidores had been temporarily suspended following an action by the Constitutional Chamber (Sala IV).

However, on March 6, Conassif confirmed the resumption of the normal procedures related to the resolution.

As part of the agreement, Conassif authorized an extension until March 31 for the finalization of this transaction, allowing sufficient time for concluding technical and legal evaluations concerning the constitutional action.

The deliberations regarding the handling of the loans under review received three extensions; the initial deadline was moved to January 31, with subsequent extensions on February 28 and again on March 31.

Banco Popular acquired valuable assets from Coopeservidores totaling ¢411.580 billion, which included loans delinquent by 1 to 30 days, securities, cash, and real estate.

The loan portfolio emerged as the principal asset, with a gross amount of ¢302.259 billion, accounting for ¢299.067 billion in principal and ¢3.192 billion in interest.

This acquisition represented 80.5% of Coopeservidores’ 'good bank'.